The TRUE Cost of Employees in America

Hire with care... it costs more than you might think! 

Hiring employees in America may be the best way to growing your business here.  But it may also be the most expensive.

Before you hire, be aware that the cash compensation (wages, salary, bonus, commissions) is only one part of the true, total cost of having an employee in the USA. 

Here are some other costs...

• Social Security tax is 12.4% on the first $106,800
• Medicare taxes add 2.9% of all wages. (The employer and employee each pay half)
• Federal unemployment insurance tax adds 6.2% on the first $7,000 of each employee's compensation
• State unemployment tax varies, but in Chicago, for example it is 3.9% on the first $12,520 paid
• Training can add 10% or more all by itself: an employee takes 3 weeks to 3 months to ramp up
• And don't forget overhead.  Does the employee need a PC?  A desk? An office or car?  if so, add 10% at least.
• What about travel expenses? Sales and service employees often travel 50% or more at a cost of $2,000/week.
• Then there's insurance.  Employees expect $300 to $1,000 per month contribution toward health insurance.
• Other benefits add up too.  Retirement savings contributions (~3%), paid time off (~10%) and other benefits are typical and expected in America.

The "extra" costs above can add 25% to 60% above the base salary.  So an $80,000 sales person could cost more than $120,000.  But wait...that is the GOOD news...  What if the employee quits or is a bad fit?  Now you are in a hurry to replace them, so you hire a recruiter (25% of first year's salary), and start over with training (10% again). 

Oh, and did the "wrong" employee damage your priceless customer relationships? Ouch.

Having dedicated staff in America might be the best move for expansion here, but hiring direct employees may not be efficient.  Before you hire, look at the alternatives.  Contract sales companies like AmeriStart can give you an entire TEAM of people in the USA -- often at less risk and less cost than a single employee.

For more on this topic, read this excellent article at CNN.com:  "Why a $14 an hour employee costs $20"